From boastful presidential tweets to breathless newspaper headlines, it’s hard to avoid hearing about the US stock market’s really good year. How good? The market value of the S&P 500 has gained about $3 trillion since the end of 2016. That amounts to a total return of 17% for investors, the best year since 2013.
A quarter of the S&P 500’s blockbuster return this year is thanks just five tech companies: Apple, Microsoft, Facebook, Amazon, and Alphabet.
Amazon, Microsoft, and Alphabet all reported earnings that beat expectations last week. The increase in market value for America’s tech giants is closing in on $1 trillion this year following the rise in these companies’ shares last week. That eye-popping threshold could be reached if Apple and Facebook report similarly strong earnings later this week.
The S&P 500 is on track to record its 104th month in a bull market, the second-longest ever. Looking at valuations, the cyclically-adjusted price-to-earnings ratio of the US stock market hasn’t been this high since the dot-com bubble of the late 1990s. This doesn’t necessarily mean a crash is looming, but if you are afraid of heights you could be forgiven for being a little nervous right now.